Mega Carrier CEO Makes Bold Predictions About Freight Rates and Driver Pay Into 2022
Chattanooga, TN – The leader of one of the largest truckload carriers in the United States is predicting freight rates and driver pay will continue rising through next year.
Eric Fuller, CEO of U.S. Xpress (USX), spoke with Yahoo! Finance this week and outlined what he believes the next year will look like in the trucking sector.
On the rate side, Fuller said USX is routinely securing 10 to 15 percent premiums on its contracted freight agreements with “more difficult freight” pulling in a 20 percent increase from pre-pandemic levels.
However, the most substantial increases have come in the spot market.
“We’re seeing spot rates run a premium of nearly 50 percent [which] is about as high as I’ve ever seen it,” Fuller said. “Right now there’s so much more demand than supply in the market, I don’t see that changing any time soon.”
According to DAT, spot load volume in July was up more than 45 percent compared to July of last year as America’s economy was just beginning to open again following widespread lockdowns.
Data from the Bureau of Labor Statistics indicates trucking still has not recovered more than 33,000 jobs lost during the pandemic.
Fuller suggested the pandemic may “have changed things permanently” in the driver market.
“On the supply side, you’ve got driver constraints that are continuing to plague the industry and we’ve seen the driver situation about as bad as I’ve ever seen it in my career,” he asserted. “I think structurally things have changed in the driver population as it relates to the job and wanting to be home with their family and things through COVID.”
He also acknowledged “pay is a big component of this.”
Despite the fact USX has increased driver pay about 30 percent in the last 12 months, Fuller believes the mega carrier will likely need to continue hiking pay.
“We believe that in order to compete against manufacturing and construction and even driving jobs where drivers are home on a more consistent basis, we think we need to have at least another 20 to 30 percent premium to the pay raises that exist today.”
Another issue he believes will create even more pressure on motor carriers competing in the labor market is the massive $1.2 trillion “infrastructure” bill passed this week by the United States Senate.
Fuller explained he expects the legislation will “create further demand and also further constrain supply.”
WATCH the entire 7-minute interview below.